BoE keeps rates steady – business news 19 March 2021.

James Salmon, Operations Director.

The BoE keeps rates steady, Consumer confidence climbs in March, Government Borrowing and more.

BoE keeps rates steady

The Bank of England has held interest rates at 0.1% and its bond-buying programme at £895bn, with its Monetary Policy Committee (MPC) voting unanimously to keep rates at record-low levels. The Bank said the outlook for the economy remained unusually uncertain, adding that it depends on the evolution of the pandemic and how households, businesses and financial markets respond to developments. Noting that plans for the easing of lockdowns suggested restrictions being lifted “somewhat more rapidly” than had been assumed in its February report, the Bank said this “may be consistent with a slightly stronger outlook for consumption growth” in the April-June period than had been previously suggested. Meanwhile, the Bank’s chief economist has said a rapid economic recovery could soon be underway. Andy Haldane said he believes that it is “more likely than not” that a “rapid-fire recovery” is on the cards. “That is coming, and I think that is coming soon,” he told a Women in Business and Finance awards ceremony. Mr Haldane, however, warned that there are risks of more persistent damage to people’s job prospects as a result of the pandemic, saying: “It seems very likely, based on the evidence we have so far, that the deepest and the most damaging of those scars will be felt by those least advantaged in the job market”.

Consumer confidence climbs in March

GfK’s monthly consumer confidence index shows British consumer morale has hit a one-year high, rising to -16 in March from -23 in February. GfK client strategy director Joe Staton said: “If this improved mood translates into spending, it might help reverse some of the economic damage the UK has suffered”. Howard Archer, chief economic adviser at the EY Item Club, said the rise in consumer confidence “fuels belief that the consumer can play a leading role in robust recovery”.

Government Borrowing

The UK Government borrowed £19.1bn last month, marking the highest figure for February since records began amid the spiralling cost of support measures during the pandemic. Figures from the Office for National Statistics showed public borrowing ballooned to £19.1bn in February this year – up from £1.5bn in the same month a year earlier.


The Treasury said this morning it had completed the sale of £1.1bn in NatWest Group shares, selling the stock back to the banking group. The agreement with NatWest, formerly the Royal Bank of Scotland Group, represents the government’s third sale of its NatWest shareholding, bringing its stake down from 61.7 per cent to 59.8 per cent.

IFS: Budget black hole may mean higher taxes

The Institute for Fiscal Studies (IFS) says a £4bn black hole in Rishi Sunak’s spending plans mean Britain faces tax hikes, with the think-tank saying the shortfall for the 2022/23 financial year went “entirely unmentioned” in the Chancellor’s recent Budget. The IFS says tax rises and borrowing are likely to increase as the Treasury looks to tackle the shortfall, with officials against the idea of another period of austerity. The think-tank said that under current plans, spending on some areas of government would be 3% lower in 2022/23 than a year earlier, and 8% lower than what was planned pre-pandemic.

JD Wetherspoon

JD Wetherspoon swung to a first-half loss as the government imposed restrictions forced the company to shutter its pubs. Pre-tax loss was £68.0 million compared with a profit of £35.7 million on year-on-year as revenue fell 54% to £461.1 million.

Capital’s occupied office space expected to rise

Property agent CBRE has predicted that firms will occupy an extra 13m square feet of office space in central London by 2026, adding to the 232m square feet already used. This come s despite some firms looking to reduce workspace after the pandemic drove a shift toward greater remote working. CBRE’s estimate is based around a forecast that office-based employment in central London could increase by almost 190,000 in the five years to 2025, equivalent to annualised growth of 1.8% per year between 2021 and 2025.

South-west leads Women in Work Index

PwC ’s Women in Work Index has seen south-west England come out on top in regard to female participation in the workforce. Scotland came second place in the rankings on an index with gauges areas such as the gender pay gap, female full-time employment, female unemployment and labour force participation. PwC has warned that the pandemic is expected to have a disproportionately negative effect on women, setting back their progress in work. “Even if job market growth returned to pre-pandemic rates by 2022, PwC estimates that progress would still be four years behind where it would have been by 2030. To reverse this damage, progress will need to proceed at twice the pre-pandemic rate,” the report said. Laura Hinton, chief people officer at PwC, commented: “There is absolutely no time to lose in addressing the very real impact of the pandemic on women”, urging governments, policymakers and businesses to work together “to empower women and create opportunities for meaningful participation in the workforce.”

Reform could cost business more than £430m a year

Analysis suggests that plans to reform the audit sector and crack down on poor practices at large firms could add more than £430m to businesses ’ costs. The analysis of reform set out in a Department for Business, Energy and Industrial Strategy report says the largest cost to business would come from extending the number of companies that fall within the proposed rules, while strengthening internal controls would also deliver another large bill. The calculations made by the FT suggest that the creation of the Audit, Reporting and Governance Authority could cost £39m per year. The Times says bringing 2,000 large private and Aim-listed companies under tougher reporting standards will cost business up to £1.7bn over ten years. It says companies affected would have to appoint an audit committee if they do not have one and undertake a re-tendering exercise and rotate their auditor more frequently. It notes that a Government cost analysis does not take into account a likely increase in audit fees for new public interest entities. Bob Neate of Mazars said extra quality control processes around public interest entity audits “will enhance the cost of delivering the audit and somebody has to pay for that.”

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